STATE ENTERPRISES
By JOHN O'DONOVAN, M.A., D.ECON.SC.
[Read before the Society, 12th May, 1950.]
Twenty-five years ago there was in existence only a single company which might be regarded as similar to the very large number of semi-State bodies which are now in existence. During the intervening twenty-five years while that particular body—the National Land Bank, Limited —has ceased to be associated with the State, there has been a remark-able growth in the number of such organisations. The purpose of this paper is to describe shortly certain of the trading bodies which have been established and to investigate how far it is possible to trace any definite line of development. Although this may lead to an attempt to cover an unduly wide field, it is intended to mention individually all tfiese bodies with the exception of (1) small organisations such as the Sea Fisheries Association, the Butter Marketing Committee, the National Blood Transfusion Association, Alginate Industries, Limited, (2) the two subsidiaries of Irish Shipping, Limited (the Cork Dockyard Company, Limited and the Insurance Corporation of Ireland, Limited —which was in existence prior to the establishment of Irish Shipping, limited), (3) certain companies which are moribund or in process of being wound up, such, for example, as the Drumm Battery Company, Limited; Oils and Fats (Eire), Limited; and Timber Importers, Limited, and (4) other bodies, such as the National Health Insurance Society, the Agricultural Wages Board, the Pigs and Ba<;on Commission, the Dublin District Milk Board, and the Central Bank which are not, properly speaking, trading organisations at all. It is also proposed not to deal with organisations which have only come into existence or are still in process of formation, such as the Irish News Agency and the reorganised Coras Iompair Eireann. Even with these bodies excluded, the subject matter is rather too extensive for a single paper.
The method of approach might take the form of placing these bodies in categories, such, for example, as dividing them into (1) statutory boards, (2) statutory companies, (3) other companies, and (4) other bodies. A chronological approach, dealing with the bodies in the order in which they have been set up, would also be possible and would have the advantage that there would then be no suggestion of an attempt to place them in order of importance. I have, therefore, decided to deal with them under general heads so that there may be some coherence about the matter. These general heads are as follows :—
I. Agricultural Companies. II. Financial Institutions. III. Industrial Undertakings.
IV. Public Utilities.
V. Transport Organisations. VI. Emergency Companies. VII. Other Bodies.
I.—AGRICULTURAL COMPANIES.
COLUCHT GROIGHE NAISIUNTA NA h-EiRBANN TEORANTA The Irish National Stud Company, Limited, was incorporated under the Companies Acts as a private company on the 11th April, 1946, in accordance with the terms of the National Stud Act, 1945, for the purpose of running a stud farm at Tully, Kildare, where the British National Stud had been located from 1916 (when it was founded on the basis of a gift from Lord Wavertree, the most valuable part of which was some thirty brood mares) to 1943.
The maximum capital of the Company is £250,000 but shares are taken up by the. Minister for Finance and paid for from the Central Fund from time to time in accordance with the Company's require-ments. At 31st March, 1950, the share capital so subscribed. was £176,855.
There are five Directors all of whom act in a part-time capacity and are appointed by the Minister for Finance after consultation with the Minister for Agriculture.
The Balance Sheet of this Company, at 31st December, 1948, was as follows :—
LIABILITIES.
Issued Capital Current Liabilities Bloodstock
Replace-ment Fund
132 31 4
£ ,145 ,255 ,200
s. 0 1
0 d.
0 I
0
Machinery, Furniture, etc.
Bloodstock Other Items Profit and Loss
Account . . •
£ s 3.463 136,027 12,275 15.834
14 1 0
5 d.
5 0 5
3
^167,600 1 1
ASSETS.
-£167,600 1 1
When regard is had to the particular time—the high point of the post-war bloodstock boom—at which this Company was established, the results up to the present cannot be regarded as unsatisfactory. If the first progeny of Royal Charger (Nearco—Sun Princess) should prove successful on the racecourse this year, it is possible that this particular venture by the State into a highly speculative business may prove as successful as the British National Stud was while at Tully.
COMHLUCHT SlUICRE ElREAKN T E O B A N T A .
The Irish Sugar Company, Limited, was incorporated as a limited liability company on 22nd September, 1933, pursuant to the Sugar Manufacture Act, 1933, for the purpose of acquiring, erecting and operating factories for the manufacture of sugar from beet grown in Ireland.
from beet grown in Ireland. Consumption of refined sugar in Ireland is iik the region of 120,000 tons a year at present and the balance of about 35,000 tons is usually imported by the Company in the form of raw sugar from Cuba. It also engages in the production of ground limestone and a plant for this purpose, purchased in U.S.A. in 1948, has been established at Buttevant, Co. Cork.
The capital of the Company is £1,999,014 consisting of 500,014 fully paid ordinary shares of £1 each (500,000 of which are owned by the Minister for Finance), 500,000 fully paid 6 per cent Cumulative Preference shares of £1 each and £999,100 in 4 per cent. State Guaranteed Debenture Stocks. The Articles of Association provide that the number of Directors shall be seven, of whom, in existing circumstances, four are nominated by the Minister for Finance (after consultation with the Ministers for Agriculture and Industry and Commerce) and three are elected by the members of the Company. The present Directors act in a part-time capacity.
The Balance Sheet at 30th April, 1949, was as follows :—
LIABILITIES.
Issued Share Capital Debenture Stock . . Due to Banks Sundry Creditors,
etc.
General Reserve and Sinking Fund for redemption of De-benture Stock . . Reserves for Capital
Expenditure Reserve for Taxation Employers' Liability Reserve for Pension
Scheme Debenture Stock,
Redemption Account Profit and Loss
Account
£ s. d.
,000,014 0 0 999,100 0 0 979,004 3 7 380,288 18 8
- 540,000 0 0 442,348 9 6 415,353 0 0 77,251 1 3 20,000 0 0
20 0 9 98,660 6 4 ^4,952,040 0 1
ASSETS.
£
Factory Premises and Plant, Machi-nery, Ground Limestone E quip -ment, Motor
Vehicles, etc. . . 567,279 4 0 Investments at Cost
(less Reserve for
Depreciation) . . 495,065^ 13 8 Stock in Trade :
Sugar . . 2,496,014 15 8 Materials,
etc. . . 731,638 18 4
Sundry Debtors, etc. Cash on Hands
3,227,653 14 0 661,170 11 7 870 16 10
^4,952,040 0 1
The financial strength of the Company is apparent from these figures.
DAIRY DISPOSAL COMPANY, LIMITED.
of the Company's existence, capital expenditure was met from voted moneys but in recent years such expenditure has been met from accumulated profits.
In 1926, there were 580 creameries and separating stations in the Irish Free State. Of these about 400 were owned co-operatively and the remaining 180 were proprietary concerns. The Condensed Milk Company of Ireland (1924) Ltd. owned 113.
As a result of the competition for milk supplies between two (or even three) creameries operating in an area where one would have been sufficient, neither concern could be assured of a large enough supply of raw material. Overhead costs and running expenses were, therefore, high and the financial standing of some of the larger co-operative societies was in jeopardy.
In order to put an end to this position, Dail fiireann in 1927 voted a sum of £500,000 to purchase the main proprietary concerns. This decision was in accord with the general State policy to make the manufacture of butter entirely co-operative and place the ownership of the industry in the hands of the farmers supplying the milk. Arrangements were made where necessary for the creation of new co-operative societies and the transfer to them of such of the proprietary creameries as it was desirable to keep in operation. Redundant premises were closed down and their milk supplies transferred to the neighbouring premises of the co-operative societies with which they had been in competition. The sum of £500,000 advanced by the State was used by the Dairy Disposal Company Ltd., for the purchase inter alia, of 183 creameries and the erection of four new creameries.
By 1928, eighty creameries had been closed as redundant and forty-two had been transferred to new societies. Much of the plant of the redundant creameries was used in the equipment of creameries set up in new areas, mainly in Counties Sligo, Cork and Donegal.
Since then, the Company has developed the creamery industry extensively in West Kerry and County Clare especially by the use of travelling creameries. At the end of 1949, it was operating seventeen central creameries, 112 separating stations and twenty-three travelling creameries in addition to a toffee factory and condenseries for its large condensed milk business. Under the Creameries (Acquisition) Act, 1943, the remaining proprietary creameries in the country (with the exception of one) had been acquired.
The Consolidated Balance Sheet of the Company and Associated Companies at 31st December, 1948, was as follows :—
LIABILITIES ASSETS
s. d. Issued Capital
Sundry Creditors Department of
Agri-culture Bank Overdrafts Reserve for
Deprecia-tion
Reserve for losses on realisation
General Reserve Profit and Loss
Account
£ 20,000 209,962 519,957 621,060 478,480 146,091 53,075 288,489 £2,337,115
s. 0 1
3 6
0 7 14 4 17
d. 0 4
0 9
0 3 10 3 5
Premises, Plant, Travel-ling Creameries, Trade Marks, etc. Motor Transport Sundry Debtors Stocks and Stores . . Cash in hand and at Bank . . * ..
1,015,639 24,090 374,088 888,981 34,317
(
£2,337,115
0 0 8 6
2
17 5 0 0 11
L
This Company is, therefore, in a very strong financial position. No payments have, however, been made to the Exchequer by way of interest on the large investment in the Company which reached £1,200,000 in all but about £350,000 has been repaid, including a sum of £112,000 voted early in 1933 to meet trading losses up to the 31st December, 1931.
The Company is also of great importance to the economy of the country as its exports of condensed milk for the year 1949 amounted to £1,098,000, output being much larger than in any previous year.
As will be gathered from its name, the intention originally was that the Dairy Disposal Company Limited should not remain in existence for any prolonged period of years, but the depression in the dairying industry which started in the Autumn of 1930 and the effects of the economic dispute with Britain made it impossible for the Company to 'arrange for the sale of the various creamery groups which it still has on hands. In retrospect, it is also not clear how it was intended that the Company should dispose of the condenseries.
II.—FINANCIAL INSTITUTIONS
AGRICULTURAL CREDIT CORPORATION, LIMITED.
The Agricultural Credit Corporation was incorporated on 30th September, 1927, following the passing of the Agricultural Credit Act, 1927, which implemented certain recommendations of the Banking Commission of 1926. The Commission found that the supply of private capital and bank loans available was inadequate for agricultural purposes generally.
In 1947, the capital structure of the Company was reorganised pursuant to the Agricultural Credit Act, 1947, to place the organisation on a sound financial basis. Prior to the reorganisation the Company had a paid-up capital of £500,000 in 525,000 " A " shares of £1 each (10/- paid up) and 475,000 " B " shares of £1 each (10/- paid up). The commercial banks held a majority of the " A " shares which carried a State-guaranteed dividend of 5 per cent, while the remainder were held by the Minister for Finance and the public. The Minister for Finance also held all the 'B " shares on which no dividend had been paid. Under the provisions
of the 1947 Act, the Minister for Finance became the sole shareholder
in the Corporation, the shares formerly held by the banks and the public 3eing cancelled and the holders paid off at par. The Act also conferred power on the Minister to nominate all the directors of the Corporation. Under the arrangements prevxously in operation three of the seven Directors were nominees of the commercial banks. The number of Directors is now three.
The Corporation may lend money to any farmer for purposes related to Agriculture and to any body corporate which engages as its principal
The Balance Sheet on the 30th April, 1949, was as follows
:-LIABILITIES ASSETS
Issued Capital 3% State-guaranteed
Mortgage Stock 1957-67 ... Bank Overdraft The Minister for Agri
culture
Sundry Accounts and deposits
Reserves
Profit and Loss Account
s. d. 30(^000 0 0
700,000 0 0 140,154 17 4 238,117 12 3 107,291 2 0 53.5CO 0 0 5,243 8 0
Loans on Security Investments . . Sundry Debtors Premises, etc. Cash on hands
I
1,326,580 12 1 209,716 15 6
5,775 6 3
1,940 10 9
293 15 0
£1,544,306 19 7 £1,544,306 19 7 Excluding the sum of about £238,000 in respect of loans (free of interest) made to farmers for restocking following the losses of livestock in the winter of 1946-47, and the large loans made to co-operative societies, it would seem that the loans made for farming purposes are in the region of £1,000,000.
INDUSTRIAL CREDIT COMPANY, LIMITED.
The Industrial Credit Company, Ltd., was incorporated as a public limited liability company on the 4th October, 1933, pursuant to the Industrial Credit Act, 1933, to carry on the business of an issuing house and to engage in the promotion and financing of industrial undertakings. The establishment of the Company was rendered necessary by the inadequate financial facilities available for new industrial undertakings. The Industrial Credit Company has, therefore, performed functions which in the case of public issues of established industries would normally be discharged by private underwriters and would not be attended by undue risk.
In 1933 and again in 1936, a public issue of share capital by the Company was underwritten by the Minister for Finance in accordance with the terms of the Industrial Credit Act, 1933. The issues were under-subscribed, and under the terms of the, underwriting agreement the Minister purchased the shares which were not taken up by public subscription. This accounts for the Minister's share-holding in the Company amounting to £804,517 out of a total paid up capital of £812,500 consisting of 500,000 shares of £1 each, fully paid, and 500,000 shares of £1 each, 12/6 paid. Apart from the ordinary powers which the Minister possesses by virtue of his holding in the Company, he also has the right, for so long as he retains his position as majority shareholder, to nominate three of the five directors, the remaining two being elected by the share-holders. The Chairman who is also Managing Director, acts in a whole-time capacity.
The Balance Sheet at 31st October, 1949, was as follows :— LIABILITIES
Paid up Capital Reserve Fund Sundry Creditors,
Bank overdraft, etc. Contingent liability in respect of guarantees Profit and Loss
£
812,500 100,000
s. d. 0 0 0 0 249,523 18 10 140,000
82,021 0 15 £1,384,045 14 7
£
219,393 ASSETS
Loans and Advances Investments
Customers' liability in
respect of guarantees 140,000 Other Assets . . 16,651
1 1,008,001 12
0 0 0 10
As the investments which the Company holds are entirely Irish industrial securities which were acquired in the main prior to 1939 and are valued for the purposes of the Balance Sheet at cost or latest market quotations, whichever is the lower, it is obvious that the Company is in a strong position financially.
IRISH ASSURANCE COMPANY, LIMITED.
The Irish Assurance Company, Ltd., was incorporated on the 15th March, 1939, in compliance with the provisions of the Insurance (Amendment). Act, 1938. The primary purpose of the Act was to safeguard the position of persons who had taken out life assurance policies with a number of companies which, at the time the Act was passed, were on the verge of insolvency. These companies were dissolved by agreement on payment of compensation to shareholders by the issue to them of shares in a temporary company which took over the business of the dissolved companies and also assumed responsibility for their liabilities.
The Minister for Finance contributed capital to the temporary company to the extent necessary to place it on a sound footing and the company issued shares to the Minister n consideration of this action. The temporary company was intended to work-off existing business only but it held all the shares in the Irish Assurance Company which undertook new business. The existing industrial life business (but not, except in one case, the ordinary life business) of certain British assurance com-panies was acquired by the temporary company in return for shares. These shares were purchased by the Minister for Finance in 1947 when the temporary company was liquidated and its assets in the form of Irish Assurance Company shares were distributed to its shareholders in proportion to their holdings. The Minister is not the sole shareholder in The Irish Assurance Company—he holds 451,268 shares of the total issued capital of 500,000 £1 shares (4/- paid up)—and his powers do not extend beyond those normally possessed by a majority shareholder in companies established under the Companies Acts.
The Minister for Industry and Commerce had the right to appoint the first Directors of the Company and the successor should the first Managing Director cease to hold office within six years from the incorporation of the Company ; otherwise, the Directors who number five at present, are appointed by the Company in the ordinary way. The Company does not enjoy monopoly rights in any branch of industrial or life assurance business—to which ts activities are confined—and it operates in competition with other Irish and foreign companies.
Its Balance Sheet at 31st December, 1948, may be summarised as follows :—
LIABILITIES
Paid lip Capital Life Assurance Funds
Ordinary Branch .. Industrial Branch Other Items
£ 100,000 3,620,197 7,534,924 226,344
£11,481,467
s. 0
19
15 13
8 d.
0 6 10 7
11
ASSETS
I Loans on Public Rates 1,233~934 Other Loans
Mortgages Investments . .
and
155,739 . . 9,385,568 Cash in Hand and on
Deposit
Other Assets . . . . 412,744283,481 £11,481,467
s. 2 9 0
12 4
8 d. 10 3 4
4 2
On the latest figures available, it would appear that the Company transacts a considerable part of the total life and industrial assurance business carried on in this country. The number of persons employed by the Company represents approximately 26 per cent of the total labour force employed in insurance and any discrepancy between the size of this force and the proportion of total business transacted by the Company is explained by the retention of the staffs of the dissolved companies.
III.—INDUSTRIAL UNDERTAKINGS.
BOKD NA MONA.
This is a statutory board established by Order of the Minister for Industry and Commerce on the 21st June, 1946, in accordance with the provisions of the Turf Development Act, 1946, to carry on the work of bog development, etc., commenced by the dissolved Turf Development Board, Ltd., with a view to the production, at the end of the development period, of 1,000,000 tons of machine-won turf yearly about half of which will be used for generation of electricity.
The Board of Directors consists of a Chairman, a Managing Director (who is required to devote the whole of his time to the duties of his office) and three Directors who act in a part-time capacity.
Apart from grants from moneys voted by Dail fiireann for the Experimental and Research Station, Bord na Mona is financed under Section 53 of the Act by advances out of the Central Fund not exceeding £3,750,000 which are made by the Minister for Finance on the recommendation of the Minister for Industry and Commerce. These advances are repayable with interest but up to the present, in accordance, with a provision of the Act, in cases other than bogs in production prior to the passing of the Act, no interest has been charged in the accounts.
The Balance Sheet at 31st March, 1949, was as follows :—
LIABILITIES
Beceipts , £ s. d. Per Capital Account 2,289,713 2 8 Sundry Creditors
Kildare Emergency and County Pro-duction Schemes Other Items...
148,102 11 11
106,847 15 69,093 5
£2,613,756 15 7
ASSETS
Capital Assets £ "s.'d. Per Capital Account 2,221,737 14 6 Cash on "Sand & at Bank 109,106 11 11 Sundry Debtors ... 118,412 16 2 Stocks and Stores ... 151,318 1 11 Production Expenses,
1949-50 13,181 11 1 £2,613,756 15 7 Bord na Mona is at present in much the same position as the Shannon Scheme during the years 1925-27. At Lullymore Factory, Co. Kildare, however, it operates for the production of turf briquettes one of the most highly mechanised works in Ireland. This has proved a very profitable business.
CEIMICI TEORANTA
This is a statutory company incorporated as a public company with limited liability under the name Monarchana Alcoil na hEireann, Teoranta, on the 11th November, 1938,, in compliance with the terms of the Industrial Alcohol Act, 1938.
The main purpose for which the Company was established was the erec- * tion and operation of factories to produce industrial alcohol from potatoes and thus provide a market for surplus potatoes. The Industrial Alcohol (Amendment) Act, 1947, under which the name of the Company was changed, also extended its objects to include the manufacture and sale (subject to licence of the Minister for Industry and Commerce) of any substance produced or obtained by chemical process.
The issued capital of the Company is £275,763 in shares of £1 each fuUy paid, virtually the whole of which is held by the Minister for Finance. There are five directors, three of whom are nominated by the Minister for Finance, and two elected by the members of the Company. With the exception of the Managing Director, all the directors act in a part-time capacity.
The Balance Sheet at the 30th September, 1949, was as follows :—
LIABILITIES
Issued Capital Sundry Creditors
(in-cluding provision for Taxation, pro-posed Dividend, etc.) General Reserve Profit and Loss
Account
i 275,763
96,844 39,000 7,168
s. 0
13 0
19 d.
0
2 0
11
ASSETS
Lands, Buildings, Plant and Machin-ery, Furniture, Motor Vehicles, etc. Stock-in-Trade Investments at cost
(less depreciation Reserve)
Sundry Debtors Cash at Bank and in
Hand
Chemical Develop-ment Account
208,720 108,816 80,296 13,541 1,935 5,466
s.
0 12
9 11 13
6 d.
0 6
0 11 6
2
^418,776 13 1 £418,776 13 1 This indicates that the Company is in a strong financial position.
IRISH STEEL HOLDINGS, LIMITED.
This is a private company with limited liability incorporated under the Companies Acts on the 20th June, 1947, to acquire the assets of Irish Steel, Ltd., and maintain the works at Haulbowlihe, Co. Cork, as a going concern.
The Balance Sheet at the 30th June, 1949, was as follows :—
LIABILITIES
Issued Capital Overdraft with Bank Sundry Creditors • Provision for Taxation
General Reserve Profit and Loss
Account
s. d. " 3 0 0 227,090 14 4
34,581 9 8 9,000 0 0 9,000 0 0 1,552 17 11 £281,228 1 11
ASSETS
Property, Plant and Equipment Stocks Sundry Debtors Other Items ..
s. d. 103,265 0 0 111,187 1 3 66,301 10 1 474 10 7
£281,228 1 11
M T ANTE, AT TEORANTA.
This Company was established on the -1st June, 1945, and represents-the amalgamation of represents-the former Slieveardagh Coalfield Development Company Limited, (incorporated on 20th May, 1941), which was dissolved and the Minerals Exploration and Development Company, Limited, which was incorporated as a public limited liability company on the 1st September, 1941, in accordance, with the provisions of the Minerals Exploration and Development Company Act, 1941. The Company has the twofold purpose of (a) working Slieveardagh Coalfield and (b) exploring and developing any particular land for the purpose of ascer-taining the nature and quantity of any minerals there and the advisability of working them.
The share capital of the Company is £200 divided into 200 fully paid shares of £1 each, all of which are held by, or in trust for, the Minister for Finance. It is financed as regards (a) above by advances not exceeding in the aggregate £88,000 repayable with interest and as regards (b) by payments from voted moneys.
The Articles of Association provide that the number of Directors shall not exceed seven or be less than four, all of whom shall always be appointed by the Minister for Finance after consultation with the Ministers for Industry and Commerce and Agriculture.
The Balance Sheet at 31st March, 1949, was as follows :— LIABILITIES
£ s. d.
Subscribed Capital Sundry Creditors
Advances by State 417,604 17 6 Interest accrued
thereon . . 58,953 0 11
£ s.d
200 0 0 6,089 18 7
476,557 18 5
Less amount written
off as per Contra, in accordance with certificate issued under Sec-tion 2 of the Minerals
Com-pany Act, 1947 379,864 3 0
15 5 £102,983 14 0
ASSETS
£ s. d.
Land, Buildings, Plant, Motor Vehicles {less amounts written
off as per Contra and otherwise)... 37,847 19 8 Stock in Trade 6,300 17 9 Sundry Debtors, etc. 4,449 3 9 Cash at Bank and on Hands .. 2,585 0 6 Exploration and Development
Accounts {less amounts written
off as per Contra and otherwise) 12,527 0 9 Profit and Loss Account {less
amount written off as per Contra) 39,273 11 7
£102,983 14 0
IV. PUBLIC UTILITIES.
THE ELECTRICITY SUPPLY BOARD.
The* Electricity Supply Board is a statutory body established in accordance with the Electricity (Supply) Act, 1927, to generate and sell electricity. The Board consists of a Chairman and six ordinary members, two of whom are part-time. The members are appointed by the Govern-ment for a period not exceeding five years.
Prior to 1925, when the construction of the hydro-electric plant in the river Shannon was decided upon, electricity was produced for sale by local authorities, companies and private individuals. The Shannon scheme envisaged the incorporation of all these sources of supply in a national network and the Board was, therefore, empowered to acquire existing electricity undertakings.
In the year ended 31st March, 1949, the Electricity Supply Board generated (and purchased) 710,000,000 units of electricity and sold 569,000,000 units for £4,344,000. The number of units sold was about double the sales inl939 which in turn were seven times the sales in 1929. The Balance Sheet of the Electricity Supply Board at 31st March, 1949, was as follows :—
LIABILITIES
Capital Accounts Amounts reserved for
capital loans repaid, depreciation, etc. Sundry Creditors Non-repayable receipts
for rural electrifica-tion
Loans from Trustees of Superannuation Funds
Reserves
Capital Assets Adjust-ment Reserve Surplus (Electricity Account) £ 19,497,529 8,391,999 1,604,020 725,000 669,200 313,888 270,297 20,650 s. 0 0 ,0 0 0 0 0 0 d. 0 0 0 0 0 0 0 0 ASSETS Capital Assets Stocks on Hand, etc. Sundry Debtors Cash in Hand and
with Bank Cost value of
Installa-tions Work and Sales Boyne Development Suspense Account Deficiency (Fisheries Account) £ 26,207,998 3,469,224 1,137,041 343,913 194,818 59,000 80,589 s. 0 0 0 0 0 0 0 d. 0 0 0 0 0 0 0
pi,492,583 0 0 • £31,492,583 0 0 It is quite obvious that from a financial point of view this body is a colossus being almost as large as all the other State bodies together.
V.—TRANSPORT ORGANISATIONS.
AER LINGUS, TEORANTA
This Company was incorporated under the Companies Acts as a private company on the 22nd May, 1935, " to carry on and foster the business and pursuit of aviation in all its forms both within and without Ireland." The Company operates one internal air service and external services to places in Britain and the Continent.
Under an agreement made on the 28th March, 1947, between Aer Rianta, Teo. ; Aer Lingus, Teo. ; British Overseas Airways Corporation and British European Airways Corporation, it was* agreed that the capital of Aer Lingus, Teo. should be subscribed for and held as to 60 per cent, by Aer Rianta and 40 per cent, by B.O.A.C. and B.E.A.
£952,000, which is held as to £571,195 by the Irish Company and £380,799 by the British Corporations, the remaining six shares having been issued to the directors and subscribers.
The Balance Sheet at 31st March, 1949, was as follows : LIABILITIES
£ s. d. Issued Capital . . 952,000 0 0 Current Liabilities
and Provisions . . 352,932 0 0
ASSETS
Premises, ground , Equipment, Air-craft Fleet and Engines and Furni-ture and Fittings, at cost less deprecia-tion and amounts written off
Materials in stock, etc. Sundry debtors, etc. Cash at Bank and in
Hand
Capital Loss on Sale of Aircraft and Equipment Expenses of increase
in authorised capital
£ 294,827 218,137 296,710 380,547 102,374 12,337 s. 0 0 0 0 0 0 d. 0 0 0 0 0 0 £1,304,932 0 0 £1,304,932 0 The very fine operational record of the Company, which has had no fatal accident arising from an air crash, may be mentioned.
AER EIANTA, TEORANTA.
This is a public company incorporated under the Companies Acts on the 5th April, 1937, pursuant to the Air Navigation and Transport Act, 1936, primarily (1) to develop civil aviation in Ireland by operating air services inside or to places outside the State either directly or through air transport undertakings in which it has a controlling interest, and (2) to acquire and hold shares in Aer Lingus, Teoranta.
The authorised share capital, at first £500,000, was increased under the Air Navigation and Transport Act, 1946, to £2,000,000., The issued share capital is £2,000,000, all the shares (with the exception of twelve held by the Directors and subscribers to the Memorandum and Articles) being held by the Minister for Finance.
The Balance Sheet of the Company at 31st March, 1949, was as follows: LIABILITIES
Issued Share Capital Amounts due to
Sub-sidiary Companies Reserve Account Sundry Creditors, etc.
£ 2,000,000 754,419 48,735 14,743 £2,817,897 s. 0 0 0 0 0 d. 0 0 0 0 0 ASSETS Premises, etc. Investments in
Sub-sidiary Companies
A e r
Lingus,
Teo. .. 571,195 Aerlinte,
Aerlinte Eireann, Teoranta, was incorporated on the 27th February,
1947, to operate air services between Ireland and U.S.A. The Govern-ment, in April, 1948, decided to abandon the project and the operations of the Company have been terminated without loss as its five Constel-lation aircraft were sold to B.O.A.C. for £1,575,000.
IRISH SHIPPING LIMITED.
This Company was incorporated under the Companies Acts as a public limited liability Company on the 21st March, 1941, for the purpose of operating shipping for the importation of essential commodities and with power to carry on associated businesses such as marine insurance and shipbuilding.
The issued capital is £200,000 divided into 200,000 shares of £1 each fully paid of which the Minister for Finance holds 199,995, the five remaining shares being held by the Directors. No dividends are payable on the Company's capital. In accordance with the Emergency Powers (No. 157) Order, 1942, the Minister for Finance guaranteed borrowings by the Company up to a maximum of £2,000,000 but the guarantee lapsed in August, 1942, no payment by the Minister being required.
The Articles of Association provide that the number of Directors shall not exceed seven. At present the Directors are appointed by the Minister for Finance after consultation with the Minister for Industry and Commerce. There are five Directors at the moment, all of whom act in a part-time capacity.
The balance sheet as at 30th June, 1949, was as follows :—
LIABILITIES
Issued Capital Sundry Creditors Tonnage Replacement
Reserve General Reserve Profit and Loss
Account . .
£
200,000 182,834 2,000,000 859,998
0 9 0 14 124,378 18 6
£3,367,212 1 11
ASSETS
Premises
Ships and Payments on account of New-Tonnage
Sundry Debtors Stocks, etc.
Investments at Cost (less Reserves) Cash at Bank and on
Hands
£ s-81,885 15 1,660,330 1 248,322 7 29,623 6 1,315,474 11 3
31,575 19 10 ^3,367,212 1 11 The very strong position of this Company is the result of profits made from its marine insurance business and carrying trade during the war years. There was a loss of almost £50,000 on the shipping department in the year 1948-49, but the Company is now operating entirely with ships built since the emergency and is, therefore, in a strong position to meet competition.
VI.—EMERGENCY COMPANIES.
These companies are in rather a different category to other State enterprises as they were designed primarily for the purpose of acting as agencies for the central purchasing of commodities subject to inter-national control during the emergency period. It thus happens that two of them (viz. Oils and Fats (Eire) Ltd., and Timber Importers, Ltd.), have ceased operations and Fuel Importers (Eire) Ltd. remains in existence only for the purpose of disposing of coal purchased in 1947.
FUEL IMPORTERS (EIRE) LIMITED.
This Company was incorporated under the Companies Acts as a private company on the 8th July, 1940. It was first established for the purpose of purchasing coal in Britain but subsequently was entrusted with the function of providing supplies of emergency fuel, e.g., turf and timber, in the non-turf areas and also made substantial purchases of coal in U.S.A. and South Africa in the year 1947, following the fuel crisis in the preceding winter.
The Company's capital is £100 in 100 shares of £1 each, only ten of which have been issued. The Minister for Finance has power to guarantee borrowings by the Company up to a maximum of £6,000,000 and has, in fact, guaranteed borrowings up to that figure.
The Balance Sheet of the Company at 31st December, 1948, was as follows :—
LIABILITIES
Issued Share Capital Sundry Creditors Due to Company's
Bankers
General Profit and Loss Account, etc.
£ s. d. 10 0 0 64,238 15 2 '5,298,603 1 10 15,934 1 4
^5,378,785 18 4
ASSETS
£ s- d-Stocks of Fuel . . 5,347,300 16 6 Debtors and DebitBalances . . . .
Furniture, equipment, transport, etc. (at cost less deprecia-tion) .. . . Cash on Hands .. Preliminary Expenses
11,617 0 3
18,008 6 3 1,826 5 4 33 10 0 £5,378,785 18 , 4 The main operations of the Company now consist in liquidating the coal and turf bought in 1947—the wood having been sold off at a loss "in the first half of 1949. It is generally believed that when the present stocks, mainly coal, have been sold there will be a deficit of about £3,000,000 to be met by the State.
GRAIN IMPORTERS (EIRE) LIMITED.
This Company was incorporated under the Companies Acts as a private company on the 29th September, 1939. It was established as a central agency to purchase and import wheat, maize and other gra'ns which were subject to international control. In addition, the Company at present is utilised for the purpose of ensuring that flour and bread can be sold at the subsidised prices.
in an honorary capacity, were nominated by the Irish Corn Trade Association.
The Balance Sheet at 28th August, 1948, was as follows:—
LIABILITIES
£ s- d -Issued Capital . . 7 0 0 Importer Distributors 4,292,557 15 2 Due to Bankers . . 214,588 1 6 Sundry Creditors . . 556,288 13 10
Flour Millers' Quota
Association . . 27,000 0 0
^5,090,441 10 6
ASSETS
Subsidy Receivable
from Exchequer . .
Payments on account of Grain, etc., on passage
Sundry Debtors Unexpired values and
payments made in advance and sacks, stationery and cash on hand
Balance of transac-tions (without tak-ing credit for Un-allocated Grain, etc. and subject to other outstanding matters and commitments)
s. d. 1,257,601 5
1,283,661 39,181
12 14
8,159 8 8
2,501,837 9 2 £5,090,441 10 6
TEA IMPORTERS, LIMITED.
This Company was incorporated under the Companies Acts as a private company on the 8th July, 1941, for the purpose of purchasing and importing teas from abroad to supplement the allocations being received at the time through the Ministry of Food. In recent years, the Company has purchased in India and Ceylon sufficient teas to meet the present ration requirements.
The authorised capital of the Company is £100 in 100 shares of £1, of which five have been issued. There are five directors each of whom holds a share. The four original directors (who still hold office) were named in the Articles of Association and the fifth was co-opted in 1947. The Minister for Finance has power to guarantee borrowings by the Company up to a maximum of £4,500,000 and has in fact guaranteed borrowings up to £4,000,000.
The.Balance Sheet at 31st March, 1949, was as follows:—
LIABILITIES
Issued Capital Credit Acceptance Due to Bankers Sundry Creditors .. Miscellaneous items
£ 5
3,750,000 71,179 177,021 15,184
£4,013,389
s. 0 0 1 2 1
5 d.
0 0 2 7 9
6
ASSETS
Furniture, etc.
Stocks on hands Sundry debtors Miscellaneous items Profit and Loss
Appropriation Account ...
£
1,687 3,929,646 48,678 12,055
21,320 £4,013,389
s. 19 7 12 17
S 5
d 11
6 7
4 6
VII.—OTHER BODIES.
IRISH TOURIST BOARD.
This is a statutory body established on the 1st August, 1939, under Section 4 of the Tourist Traffic Act, 1939. The purpose of the Board is the encouragement and development of tourist traffic and it has powers of regulation and control in matters relating to that traffic, in particular the accommodation and attractions available for tourists.
The Board consists of a Chairman and four other members (appointed by the Minister for Industry and Commerce with the consent of the Minister for Finance) all of whom are entitled to carry on other gainful activities except that a member of the Board may not be nominated or elected as a member of Dail fiireann or Seanad fiireann.
A non-repayable grant-in-aid, which may not exceed £45,000 a year, is made available towards the administrative and other expenses of the Board out of moneys provided by the Oireachtas. Under the Tourist Traffic (Amendment) Act, 1946, the Minister for Finance may also, on the recommendation of the Minister for Industry and Commerce, make to the Board repayable advances from the Central Fund not exceeding in the aggregate £1,250,000. Save in exceptional circumstances, sums so advanced have to be expended solely on works of a profit-earning character. In the year ended 31st March, 1949, non-repayable grants amounted to £30,000 and repayable advances to £12,108.
The Balance Sheet at 31st March, 1949, was as follows :—
LIABILITIES
Repayable Advances Interest due on
Re-payable Advances Revenue Account Sundry Creditors Income Tax Reserve Other Items
£ s. d. 413,914 19 11 44,273 11 6 10,905 6 11 2,652 2 2 3,050 0 0 1,150 0 0
£475,946 0 6
ASSETS
Property, Premises, Furniture, Trans-port, etc.
Loans on Mortgage Security
Cash in Hand and at Bank
Other Items
Profit and Loss Account
369,879 5 3 9,029 7 5 13,086 19 11 5,714 0 2 78,236 7 9 £475,946 0 6 The weak position disclosed by this Balance Sheet has been aggravated by the sale since the 1st April, 1949, of major properties of the Board at prices which were very much less than their cost plus development expenditure.
THE RACING BOARD.
This is a statutory body set up in accordance with the terms of the Racing Board and Racecourses Act, 1945, for the purpose of improving and developing horse breeding and horse racing.
are representative of or have functions in relation to or are otherwise connected with racing, or the ownership or breeding of bloodstock or bookmaking.
The income of the Board is derived from a levy (at present 2 J per cent.) on bets made with bookmakers on racecourses and from the working of totalisators on racecourses, the usual deduction of ten per cent, being made from bets placed with the totalisator. The net annual income from the levy is more than twice that from the totalisator.
The Board's income is expended on increasing stakes, carriage of horses to race meetings and the,improvement of racecourses. It also assists substantially the publication annually of THE IRISH HORSE.
The Balance Sheet at 31st March, 1949, was as follows :—
ASSETS
Sundry Creditors and Reserves
General Purposes A/c. Balance
£
278,810 12,789
£291,600
s. 1
19
1 d.
3
9
0
Premises, Transport, etc.
Investments at or under market value Sundry Debtors Cash in Bank and on
Hands
£
41,081 216,078 8,409 26,030 £291,600
s. 17
6 6 10 1
d. 6
6 5 7 0
The bulk of the Board's income up to the present has been spent on increasing stake money and carriage of horses but, as building materials become more plentiful, improvements to racecourses, which have already been carried out where materials were available, will become more important and adequate reserves for this purpose have been set aside. Even with the restrictions in operation, a sum of over £210,000 has been spent in the improvement of racecourses and provision of amenities for the public.
The Board has been successful in keeping the standard of racing in Ireland at the high level reached during the war years when there was no racing in Great Britain. As a result, the standard of bloodstock in Ireland at present is probably higher than it ever was.
GENERAL CONCLUSIONS.
The direct investment of the State at the 31st March, 1949, in organisations covered in this paper may be set out as follows :—
Eepayable advances from Central Fund :
Electricity Supply Board 19,492,280 Bord na Mona .. .... 2,029,000 Purchase of Creameries .... .... 808,000 Irish Tourist Board .., 413,915
Purchase of Shares :
Aer Rianta, Teo .... 1,999,989 Industrial Credit Company, Ltd 804,517 Irish Sugar Company, Ltd. .... 500,000 Agricultural Credit Corporation, Ltd. 300,000 Ceimici, Teo. ... 275,756 Irish Shipping Ltd. 199,994 Irish National Stud Company, Ltd. 162,883 Irish Assurance Company, Ltd. .. . 129,814
TOTAL
4,372,953
£27,209,840
The Electricity Supply Board thus accounts for about seventy per cent, of the total.
In the financial year 1948-49, the return received by the Exchequer from these organisations was as follows :—
Interest on Advances :
Electricity Supply Board
by Dividends (gross) on Shares held
Minister for Finance :
Agricultural Credit Corporation Ltd. Ceimici, Teo. . ....
Comhlucht Siuicre Eireann, Teo. . . Industrial Credit Company, Ltd. . ..
TOTAL
747,821
9,000 27,576 25,000 32,181
£841,578
It may also be of interest to tabulate shortly the amount of the borrowings from their bankers guaranteed by the Minister for Finance in respect of State companies at the 31st March, 1949.
Name of Company
Fuel Importers (Eire), Limited Tea Importers, Limited Oils and Fats (Eire), Limited Grain Importers (Eire), Limited. . Irish Steel Holdings, Limited
TOTALS
Maximum amount of Guarantee £ s. d. 6,000,000 4,000,000 1,500,000 1,250,000 300,000 13,050,000
Actual amount due by Company £ s- d -4,996,773 18 1 3,820,815 1 3 747,180 17 7
Nil 213,853 17 3 9,778,623 14 2
As is well known, one of the reasons for setting up bodies such as these has been to give the persons directing them freedom from parliamentary control in their day to day operations. It looks, however, as though there is a feeling that this development has been carried too far, because recently the question of some form of review of the financial operations of State-sponsored bodies has engaged the attention of both houses of the Oireachtas, a motion on the matter being discussed in Seanad Eireann on the 2nd March, 1950. During the debate, the Minister for finance indicated that this particular question has been receiving the consideration of the Government during recent years but that no conclusion has been reached.
Ome definite line of development can be traced. In the first decade,
the public were usually invited to subscribe for shares but with the exception of the preference shares of the Irish Sugar Company, Ltd., the response was so poor that the expense and trouble involved could not be justified and the more recent organisations have all been financed directly or indirectly by the Exchequer.
Formerly, companies in the main might be divided into public and private. State companies might now be added as a third category, their outstanding characteristic being that the bulk of the share capital is held by the Minister for Finance and that the single shares held by a-H other persons (including even the directors) are held in trust for him. It may also be of interest to consider which type of organisation is the most suitable for State trading purposes. As regards ease of establishment, there cannot be any doubt that the statutory board can be brought into existence much more easily and more expeditiously thann the statutory company for which a memorandum and articles of association must be prepared, signatures obtained and registration formalities completed. To bring a statutory board into existence all that, is required is a short statutory instrument. As against this great •advantage in the initial stages, it has been argued that the company organisation is more flexible and that awkward though the amendment of a memorandum of association may be, should the necessity arise, it can normally be achieved with much greater rapidity and much greater certainty than the amendment of a statute. On the whole, however, t^e advantages in the case of public organisations appear to lie generally with the statutory board. ,
Finally, in view of the great interest in nationalisation in Britain in recent years, the extent to which these State enterprises here represent nationalisation may be considered. For this purpose, nationalisation re ay fee defined as the conversion by legislation of private enterprises into State monopoly. Only three of the bodies covered can be said to have any element of this, viz., the Dairy Disposal Company, the Irish Assurance Company and the Electricity Supply Board. The first of these was not intended to be a permanent company, neither it nor the second is a monopoly and the third has so completely overshadowed the small organisations it replaced that it must be regarded as a vast new undertaking. All the other bodies represent enterprises originated by the State.
DISCUSSION.
assembly of the material relating to State enterprises would, provide a valuable work of reference. She hoped that the paper would stimulate others to contribute detailed studies of some of the enter-prises which were touched on—necessarily in brief—in the paper. Papers of this kind would be most valuable to the Society. She thought there was a tendency on the part of some members of the public to criticise State companies adversely whether such criticism was deserved or not. There was an impression abroad perhaps that those who were placed in control of State concerns were richly re-warded. Those who wished to satisfy their curiosity on this score might profitably consult the Dail 'Debates of 23rd October, 1946, in which the Minister for Finance, had given much detailed information in reply to a Parliamentary question.
On first reading the paper she had some doubts as to the categories of undertakings adopted and questioned the inclusion of Comhlucht Siuicre Eireann as an agricultural company and, on the other hand, Bord na Mona as an industrial undertaking. The selection of appro-priate categories must, however, be largely a matter of opinion and on the whole she had come to the conclusion that it would be difficult to quarrel with the arrangement which had been adopted.
In the section dealing with Irish Shipping Limited she thought reference might have been made to the Irish Shipping Limited Act, 1947. This Act, which had met with support from all sections of the Oireachtas, gave permanent form to the earlier emergency legislation under which the Company had been established.' The Act provides for an increase in the share capital of the Company to a total of £5 million. The present issued capital of £200,000 is out of proportion to, the Company's assets. The Act also provides that the Minister for Finance may purchase shares of the Company and may guarantee the principal or interest or both on any moneys borrowed by the Company up to £2 million, and that the Minister for Industry and Commerce may pay subsidies to the Company. No subsidies have, in fact, been paid to the Company.
Those who are familiar with the Irish Shipping Limited accounts will be aware that profits from the date of establishment in 1941 to June, 1949, had amounted to £2-J million, after providing a similar sum of £2J million for taxation. The fact that the Company have been able to acquire a fleet of seven modern vessels at a cost of about £2 million has provided a measure of national insurance against any future emergency. This State enterprise has given us two new industries which would not have come into being under private enterprise : (i) the deep sea shipping industry, and (ii) the marine underwriting market. The marine insurance business has been sold to the Insurance Corpora-tion of Ireland but it is of interest to note that it has a substantial premium income from abroad. Irish Shipping Limited is also a sub-stantial dollar earner.
by operating subsidy, tax relief, building subsidy, or by some other means.
Dr. 0'Donovan had referred to the fact that a member of the Irish Tourist Board might not be nominated or elected as a member of Dail Eireann or Seanad Eireann. She inquired whether there was not a similar provision in the legislation establishing some of the other State enterprises.
In conclusion, she hoped that at some future time Dr. 0'Donovan could take this paper a step further and give the Society his views as to the future of the State enterprises. There might, for instance, be a case for handing some of them over to private enterprise now that they were established. There was also the question as to whether the State Company was suited to our national economy and, if so, whether there should be any further extensions in the number of State enterprises or changes in organisation of existing concerns.
348
